Taylor Swift has re-recorded one of her early albums. Sure, it’s big news for her loyal fans, but it’s also a fascinating story that shows how technology is helping artists – and brands – forge new types of relationships with fans that can create value, or destroy value for others.
But before we get to that, we need to understand the knotty legal background of Swift’s back catalogue. In 2019 the rights to her first six albums were sold to Scooter Braun, Justin Beiber’s manager, who Swift has accused of bullying and trying to dismantle her musical legacy.
Last year, Braun sold the rights onto Shamrock Holdings, a private equity firm founded by Walt Disney’s brother. The deal was reportedly worth $300m (€250m) and – according to Swift – Braun will continue to profit from her old musical catalogue and will exclude her from partnering with Shamrock Holdings or using the material in any way.
Unwilling to be pushed around, Swift has come up with a radical solution: she’s going to re-record her albums and tell her fans that the re-records are her preferred versions.
Critics have given the musical reimagining the thumbs-up. Business strategists should be similarly impressed with the strategic move to undermine the competition. It’s clear that Taylor Swift possesses commercial nous to match her musical talents.
Two things make this economic wrecking ball possible. First: the abundance of content on the internet and the rise of streaming services. In the Spotify era, fans lose nothing when an artist gives a seal of approval to a particular version of a song or album. It’s not like they have to bin the physical LPs or CDs they shelled out for.
Second: fan power. Swift has built an incredibly loyal following on social media – even going so far as sending some of them gifts and handwritten notes in Christmas 2014, creating a blizzard of festive goodwill and the hashtag #swiftmas. Swift can now use these loyal fans to her advantage in her contractual dispute. If they stop listening to the original songs, and insist they don’t get airtime, the value of the back catalogue becomes unclear.
It’s clear that Taylor Swift possesses commercial nous to match her musical talents.
Interestingly, Swift isn’t the only artist that has used fan power to protect their commercial interests. Comedian Dave Chapelle called on fans to boycott streaming services showing his early TV shows for which he was receiving no royalties. The old contracts made no allowances for streaming media.
The result? People power worked and here’s how Chapelle thanked his fans on Instagram: “You made that show worthless because without your eyes, it’s nothing,. And you stopped watching it. They called me and I got my name back and I got my license back and I got my show back, and they paid me millions of dollars.”
So what can the rest of us learn from this new brand of fan-power, enabled by technology and wielded so effectively by Swift and Chapelle?
Artist Damien Hirst is to create an ‘art protocol’ featuring 10,000 oil paintings, each with its own NFT.
In the digital age, brands and businesses that can create a relationship with their customers akin to Swift or Chapelle’s have an army of supporters that can be mobilised. In big enough numbers – and where there’s a cause – they can be used to undermine competition in a variety of ways.
The flip-side is also true. Armies of fans can create value. Sure, there are plenty of traditional ways that this value is realised. It may be slightly faddish, but forward-thinking creators have found a new way to engage their audience: minting their own digital currencies or using non-fungible tokens, or NFTs. NFTs are verifiably unique blockchain-based assets.
To date, visual artists have been the ones to try to cash in. Last month digital artist Beeple sold an NFT of his work for $69m at Christie’s. Damien Hirst will create an ‘art protocol’ featuring 10,000 oil paintings, each with its own NFT. In music, Snoop Dogg, Kings of Leon and others have had commercial success with NFTs.
The fashion world is ripe for NFTs too. Gucci just released a pair of augmented reality sneakers. And a virtual shoe brand RTFKT Studios is selling virtual sneakers as NFTs. A recent design sold out in seven minutes and generated $3.1m.
Most interestingly, in the arena of sport, NFTs are also taking off. NFL star Rob Gronkowski recently released five digital trading cards. They sold for $1.6m worth of Ethereum. And the NBA has announced NBA Top Shot, a blockchain-based platform that allows fans to buy, sell and trade officially-licensed video highlights. It’s trading cards for the cryptocurrency age. And it’s big business; the physical trading card business is worth $5bn to $6bn annually. There certainty seems to be appetite for a digital equivalent.
An NFT’s value comes from the value a community of fans places on the token and the bragging rights that come with owning it.
But this demand is based on the emotional connection between the team, player, artist or band and their fans. Of course, critics and naysayers point out that there’s an oxymoron here – the concept of rare, digital items. And they’re right, there’s no such thing as scarcity on the internet. Why buy a digital piece of art, when someone can copy it with a screen-grab?
But the fans who are buying in aren’t just paying for the thing, they’re paying for their ownership of the thing, as perceived by a community of fans. And this is why cryptocurrencies and fandom are a good fit: bitcoin’s value doesn’t come from the blockchain, rather from a collective belief of that it has value.
Similarly, an NFT’s value doesn’t come from the fact that is verified, but with the value a community of fans places on the token and the bragging rights that come with owning it.
In any area where customers spill over into fans, savvy businesses now have an opportunity to mobilise their fanbase around a cause, or create tokens that can then be sold or distributed to community members and redeemed later on for access, perks, or exclusive stuff.
But to realise this potential, NFTs & tokens need to be seen less as a PR bandwagon and more like a driver of additional value. It’s all about having a direct relationship with followers and devotees and thinking about how to augment and expand their experience.
